Recall Holdings Rejects A$2.22 Bln Acquisition Offer From Iron Mountain

(RTTNews) - Australian data management solutions provider Recall Holdings Ltd. (REC.AX, RCLHF.PK) said Monday its board of directors have unanimously rejected a non-binding indicative acquisition offer from larger U.S. peer Iron Mountain, Inc. (IRM), saying the offer materially undervalues it.

Iron Mountain offered to acquire Recall Holdings for A$7.00 per share in a cash and stock deal valued at about A$2.22 billion or $1.83 billion.

Recall said the total consideration includes A$404 million cash (18 percent) and A$1.82 billion in Iron Mountain shares (82 percent) with a fixed exchange ratio, which implies A$1.27 in cash and A$5.73 in Iron Mountain shares per Recall share.

The offer represents a 9.4 percent premium over Recall Holdings closing price on the ASX of A$6.40 per share on Friday.

Following the rejection, the shares of Recall Holdings are sky rocketing more than 19 percent in Monday's regular trading session on the Australian Securities Exchange.

Iron Mountain's offer was subject to a number of conditions including due diligence, unanimous board recommendation, exclusivity provisions, and other regulatory approvals.

The Recall Holdings board said the offer does not represent an appropriate sharing of the potential value creation from the transaction, which is about $3.9 billion. The company estimates the proposed deal to generate generate substantial synergies of about $250 million per annum.

"The premium offered over Recall's 12 December 2014 trading price represents less than 5% of the total value creation, while creating value for Iron Mountain equivalent to 49% of its current market capitalization," Recall Holdings said in a statement.

Recall Holdings also noted that the offer does not reflect its fundamental value of Recall in line with its strategic plan executed by the management following its demerger from supply-chain logistics company Brambles Ltd. (BXB.AX) in December 2013.

Recall revealed it will continue to focus on its strategic objectives to aggressively growing its business, increasing shareholder value and supporting its customers around the globe.

Recall said the strategic plan has successfully positioned it towards attaining a target of double-digit revenue and EBITDA growth in fiscal 2015. The plan would also lead to the continued improvement of Recall's operating margins over the medium term.

In Monday's regular trading session, REC.AX is currently trading on the ASX at A$7.63, up $1.23 or 19.22% on a volume of 1.0 million shares.

Meanwhile, IRM closed Friday's regular trading session at $36.44, down $0.71 or 1.91% on a volume of 1.25 million shares.